SEARCH INVESTING IN PHILIPPINES

Friday, November 5, 2010

How well do you know your stock?

Way back I posted a blog topic regarding stock index. These indexes represent the segments of the stock market and also use as an overall indicator of the Philippine economy. If you haven't read that please click here.

As you have already noticed I got this Photobucket slideshow showing some of the listed companies logo or photo. In a way a logo will remind you of the stocks they represent. But aside from the logo or photo and what it represent it is also important that one knows the company inside out.

The Philippine Stock Exchange website has a link for corporate information(to read my post on PSE navigation to corporate information click here) . Such information can help a potential investor to decide in making that buy or sell.

The SEC requires a quarterly report fro listed companies called 17-Q. This report outlines the company's operation and standing for a quarter of the period. It includes comparative Balance Sheet, Profit & Loss, Statement of Changes in Equity, Statement of Cashflows, Notes to Financial statements, Management discussion, Key operating highlights, and other pertinent reports and disclosures.(See ABS sample cover page below)

Some of the information in this document are use in the computations of some fundamental analysis like liquidity ratios, growth ratios, and other common size ratios. Also one can see comparison from last year. This comparison enable investors to discern whether the company is a good buy or not. An increase in asset with a corresponding increase in net income indicates good performance of the company(there are many more other computations to gauge the value of a stock).

This report might be nosebleed but it pays to read it because it gives a possible investor an insight about the company in the eyes of the management of the company as represented in their report. Such documents also have to comply with the accounting and reporting standards and SEC's reportorial requirements thus we have some level of assurance that such report is not a misrepresentation of the company's true state.